With green issues increasingly dominating the media agenda the small business community is gearing up for the inevitable transition to a low-carbon economy. Although small businesses in the UK may be concerned about the implications of new regulations and proposed tax regimes to reduce carbon emissions, the transition to a low-carbon economy also presents significant economic and industrial opportunities for small businesses.

Small and medium enterprises (SMEs) are increasingly realising that reducing their carbon footprint is not only good for the environment - improved energy efficiency can also lower costs, which can impact significantly on the bottom line of most businesses. Energy savings will not only contribute to reduced carbon emissions, it is estimated that British business could save up to £6.4 billion a year from resource efficiency measures that cost little or nothing to implement. Further investments in longer-term energy saving measures could result in even more significant reductions in costs. With SMEs accounting for 50 percent of total UK business energy consumption, the potential benefits for both the environment and small business profitability is clear.

FSB research suggests that SMEs are already taking environmental responsibility seriously. An FSB survey in 2007 showed that 83 per cent of members who responded were engaged in waste minimisation and recycling, while 39 per cent were engaged with energy efficiency measures. Some 41 per cent of businesses bought products that were more environmentally friendly, while 30 per cent reported changing their core products and services to be more environmentally friendly.

The FSB has been working with the government to provide practical business guidance to help SMEs take effective action on carbon and resource efficiency, which is now available through Business Link, either locally or online (see www.businesslink.gov.uk). Businesses can also find useful information on reducing energy consumption from the Carbon Trust (www.carbontrust.co.uk).

The SME sector has potential to play a huge role in reducing carbon emissions, so government policy should reflect this. The huge potential of the SME sector in helping to fight climate change should be properly harnessed by government in a way that allows businesses to grow while meeting the challenges of the move to a low-carbon economy. However, while reducing the environmental impact of large multi-national operations has been the focus of government policies so far, there is a concern that heavy-handed regulation geared towards larger businesses could impact negatively on the small business sector. SMEs don’t necessarily operate in the same way as big business, so regulations designed for this sector may not be appropriate for a large slice of UK businesses.

The UK’s 4.7 million small businesses not only have a crucial role to play in contributing to the fight against climate change, but they are also well placed to grasp the opportunities that the move to a low-carbon economy has to offer.

Forward-thinking British SMEs can also capitalise on the fast-growing demand for more environmentally sustainable products and services and for renewable energy technologies. As the global economic recovery gathers pace, SMEs can position themselves at the forefront of the new low-carbon economy.

The growing low-carbon economy presents significant opportunities for UK businesses. A UK government commissioned report by Innovas earlier this year estimated that the world market for low-carbon and environmental goods and services was worth £3trillion in 2007/8 and could rise to £4.3trillion by 2015. In the UK, this sector was worth £106.5 billion in 2007/8, which in terms of contribution to the economy placed it ‘somewhere between the UK’s healthcare and construction sectors’. The UK is the world’s sixth-largest low-carbon and environmental economy, with 3.5 per cent of global market share. UK SMEs are well placed to capitalise on new green industries and products. The renewable energy technology sector offers particular potential for start-ups and innovative businesses, while other areas for green growth include food provisioning, pro-biodiversity activities and green transport solutions.

The FSB’s Keep Trade Local campaign, which aims to encourage the use of local businesses, also ties into the UK’s transition to a low-carbon economy. As well as reducing carbon emissions, the movement towards local and regional strengthening of businesses and infrastructure provides a stronger more sustainable model for SMEs that rely on domestic rather than international demand for products.

While there may be challenges ahead in the move to a low-carbon economy, small businesses can not only play their part - they can benefit from it.